Is Tata Consumer Products 'Exiting' Starbucks In India? Company Clarifies

Tata Consumer Products Ltd (TCPL) has refuted claims suggesting that Starbucks, the popular American coffee chain, is planning to exit the Indian market. The company described these reports as “baseless,” providing a clear statement on the ongoing operations of the Starbucks joint venture in India.

Tata’s 50:50 Joint Venture with Starbucks
Tata Consumer Products operates Starbucks in India under a 50:50 joint venture with Starbucks Corporation, the global coffee brand. The café chain has established itself as a leader in India’s competitive café market, with 457 stores across 70 cities as of September 2024. The joint venture aims to expand its footprint, targeting a total of 1,000 stores by FY28.

Financial Performance and Expansion Plans
TCPL’s revenue from operations in FY24 rose by 12% to Rs 1,218.06 crore, highlighting the steady growth of its business. However, the company reported a widened loss of Rs 79.97 crore, up from Rs 24.97 crore in FY23, primarily attributed to the costs associated with expanding Starbucks operations in the country. Advertising and promotional expenses also saw a sharp increase of 26.8%, totaling Rs 43.20 crore, while royalty payments amounted to Rs 86.15 crore.

Focus on Scaling Starbucks in India
Despite the widening losses, TCPL is committed to scaling up Starbucks in India. In an interview last month, TCPL MD & CEO Sunil D’Souza emphasized that the company’s strategy with Starbucks is not focused on immediate store profitability. "With Starbucks, we are very clear that the store profitability is not an issue. And as we get to scale, we know that we can generate profits out of it,” he said, indicating confidence in the long-term profitability of the venture.

Clarification Amid Speculation
The clarification from Tata Consumer Products came in response to reports suggesting that Starbucks was contemplating exiting India due to high operating costs, mounting losses, and competition from cheaper local alternatives. In a regulatory filing on Thursday, TCPL firmly rejected these claims, reiterating that the reports were without merit.

Starbucks’ Journey in India
Starbucks entered the Indian market in October 2012 through its joint venture with Tata Group. The first Starbucks store in India opened in Mumbai’s Elphinstone Building, marking the brand’s entry into a rapidly growing coffee culture in the country. Since then, Starbucks has steadily expanded its presence across the nation, aiming to continue growing its operations in the coming years.